BrightSpring Health Services(US:BTSG)2025-08-01 12:46PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Q2 2025 are presented, with Community Living reclassified as discontinued operations Condensed Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Total Current Assets | $2,647.96 | | Total Assets | $5,943.60 | | Total Current Liabilities | $1,505.37 | | Total Liabilities | $4,198.17 | | Total Shareholders' Equity | $1,742.89 | Condensed Consolidated Statement of Operations Highlights (Three Months Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Total Revenues | $3,147.70 | | Gross Profit | $374.85 | | Operating Income | $48.56 | | Net Income | $27.54 | | Diluted EPS | $0.13 | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $150.67 | | Net cash used in investing activities | $(47.43) | | Net cash used in financing activities | $(94.26) | - The Community Living business has been classified as discontinued operations and held for sale as of the first quarter of 2025, following a definitive sale agreement, with historical financial data recast to reflect this change4452 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial performance, highlighting 29.1% Q2 revenue growth and a 28.8% Adjusted EBITDA increase Overview and Key Highlights BrightSpring plans to divest its Community Living business for $835 million to streamline focus and is no longer a 'controlled company' - The company entered into a definitive agreement to divest its Community Living business for $835 million, with the transaction expected to close in late 2025, intended to streamline service offerings and increase focus on senior and specialty populations138166 Q2 2025 Financial Performance Highlights (vs. Q2 2024) | Metric | Q2 2025 | Change | % Change | | :--- | :--- | :--- | :--- | | Revenue | $3,147.7M | +$709.4M | +29.1% | | Net Income | $8.5M | Flat | 0.0% | | Adjusted EBITDA | $142.5M | +$31.9M | +28.8% | | Adjusted EPS | $0.22 | +$0.16 | +266.7% | - Following a secondary offering in June 2025, BrightSpring is no longer a "controlled company" under Nasdaq corporate governance standards142 Results of Operations Detailed Q2 2025 consolidated and segment-level financial results show 29.1% revenue growth to $3.15 billion, with flat net income Consolidated Results of Operations (Three Months Ended June 30) | Metric (in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $3,147.70 | $2,438.25 | +29.1% | | Gross Profit | $374.85 | $312.18 | +20.1% | | Operating Income | $48.56 | $38.65 | +25.6% | | Net Income | $8.54 | $8.49 | +0.6% | - Pharmacy Solutions segment revenue grew 32.0% YoY in Q2 2025 to $2.79 billion, primarily due to volume growth in prescriptions, especially specialty branded drugs, with Segment EBITDA increased 32.0% to $124.7 million202203210 - Provider Services segment revenue grew 10.5% YoY in Q2 2025 to $357.6 million, driven by volume growth and rate increases, with Segment EBITDA increased 11.4% to $56.5 million221222227 Non-GAAP Financial Measures Key non-GAAP measures include EBITDA, Adjusted EBITDA, and Adjusted EPS, with Q2 2025 Adjusted EBITDA at $142.5 million, up 28.8% Reconciliation of Net Income to Adjusted EBITDA (Three Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $8.54 | $8.49 | | EBITDA | $90.40 | $78.35 | | Total adjustments | $52.12 | $32.28 | | Adjusted EBITDA | $142.52 | $110.64 | Adjusted EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Diluted EPS | $0.04 | $0.04 | | Adjusted EPS | $0.22 | $0.06 | Liquidity and Capital Resources The company's liquidity improved to $548.2 million as of June 30, 2025, with H1 2025 operating cash flow at $150.7 million - Total liquidity stood at $548.2 million as of June 30, 2025, comprising $70.1 million in cash and $478.2 million available under its credit facilities252 - Net cash provided by operating activities for the first six months of 2025 was $150.7 million, a significant turnaround from a net cash use of $94.1 million in the same period of 2024254 - The company's leverage ratio, as calculated under its First Lien Credit Agreement, improved to 3.64x at June 30, 2025, from 4.16x at December 31, 2024272 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from inflation on labor and pharmaceutical costs, and interest rate fluctuations on variable-rate debt - The primary impact of inflation is on labor and pharmaceutical drug costs, with limited ability to pass on these increased costs for services to Medicare and Medicaid patients due to fixed reimbursement rates275278279 - The company is exposed to interest rate risk on its variable-rate debt, where a hypothetical 1% increase in interest rates would decrease annual net income and cash flows by $5.3 million, a risk partially hedged with interest rate swaps280281 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - Based on an evaluation by management, the company's disclosure controls and procedures were concluded to be effective as of June 30, 2025282 - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting283 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings not expected to materially affect financial condition, and the Silver case was finalized - The company is involved in various legal proceedings arising from the ordinary course of business, which are not expected to have a material adverse effect on its financial condition285 - The Silver matter, a significant legal proceeding against PharMerica, was finalized with a settlement agreement in May 2024 and dismissed with prejudice in July 2024, with a total financial impact of $120.0 million that has been fully paid118119 Item 1A. Risk Factors No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors affecting the company's business from those disclosed in its 2024 Annual Report on Form 10-K287 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On February 27, 2025, 26,001 restricted stock units were granted to a legal service provider, exempt from registration - On February 27, 2025, the company granted 26,001 restricted stock units to a legal service provider in exchange for services, exempt from registration under Section 4(a)(2) of the Securities Act288 Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - None289 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable290 Item 5. Other Information No other information is disclosed for the period - None291 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The report lists various exhibits filed, including the Certificate of Incorporation, Bylaws, agreements related to the company's Tangible Equity Units, and officer certifications (302 and 906)293